Real Estate Strategies for New Home Buyers
Ten Must-Know Tips Before You Embark on the Purchase Process
Wouldn’t it be great to click your heels together and have your dream house magically appear? While you’re waiting for the rush order on the ruby slippers, here’s a guide to help you through the first steps to homeownership.
Determine Whether You Should Buy or Rent
As of the most recent U.S. Census Bureau survey, the homeownership rate stood at slightly over two-thirds—within a point of the all-time high. The primary benefits of ownership include tax advantages, potential price appreciation, and the glowing pride of equity ownership. Take the emotion out the decision by calculating the financial feasibility of home ownership using the New York Times Buy or Rent Calculator.
Look into Long-Term Value
A short tenure of homeownership is no longer financially viable in most regions. As a homebuyer, you should check out at a house’s long-term worth. For example, if you’re planning on starting a family, a three-bedroom home might be wiser in the long run than a two-bedroom. Similarly, a couple with a small child should shop for houses in an area with strong public schools, and an older homebuyer might want to choose a single-level residence so a move would not be necessary in case of diminished mobility.
Start Your Search Online
The National Association of REALTORS® reports that more than 80% of home seekers begin their search online. Certainly the World Wide Web is an ideal spot to get to know the market and educate yourself on what’s out there. You can find photos, floor plans, and specs. Plus, you can filter for square footage, number of bedrooms, neighborhood, and price—all from your personal computer. Start your search by surfing over to Trulia.com or Realtor.com.
Take It to the Streets
Everyone has heard the old adage regarding the three most important elements to consider in a real estate: location, location, location. This is great advice, great advice, great advice. It’s great to do your primary research online, but be sure to drive through the neighborhoods to check out the area and see the sites! What’s nearby? How’s the parking? Do the streets have curbs? Are there parks nearby? These are all questions you’ll want to address.
Start Early with Financing
Get preapproved by a reputable mortgage broker. Your broker can both counsel you on an appropriate price range and educate you as to the different types of financing available. There are so many different options now—both fixed and adjustable rate loans—and it makes sense to understand the various programs that best fit your needs. Plus, once you’re preapproved for financing, you can narrow your focus to properties in the appropriate price range, making your search easier. Down the road, you can furnish the broker’s pre-approval letter in conjunction with any offer, which immediately increases the viability of your offer.
Contact a Realtor
Potential purchasers are often reluctant to interact with realtors for fear of being pushed or pressured into acting before they feel comfortable. A good agent, however, would never put a buyer into an uncomfortable situation. A knowledgeable realtor with local expertise can be an invaluable resource as you enter into one of the biggest and proudest financial investments of your life. Seek out recommendations from friends, family, or online sources. Keep in mind that it’s best to have some kind of idea of neighborhood, size, and price range before you meet for the first time.
Beware of the Illusory Bargain
Be wary of the “illusory bargain,” a property priced below comparable homes because it needs work. A similar property in move-in condition might appear as more expensive initially, but the “bargain” home will almost always have a higher final price tag when you factor in the expense of necessary repairs and renovations. This is especially true if the repair work needed is extensive enough to render the house uninhabitable during construction, necessitating the additional expense of interim housing.
Go for a Test Drive
You’ll want to “test drive” any routes you frequent from a home you’re considering—and be sure to do this during the time at which you would be making the trip. Traffic patterns vary dramatically at different times of day, and you don’t want any surprises. You can efficiently “role play” the commute through Google Maps. Click over to maps.google.com at the time of day you anticipate beginning your commute. Go into the “Get Directions” tab and type in your starting and ending addresses. Google also provides a “Take Public Transit” option for the eco-friendly commuter.
Weigh Other Perspectives (Carefully)
Feel free to confer with friends and family about the big decision, but be wary of heeding all of the advice. Even the best-intentioned loved ones tend to filter advice through the prism of their own perspective. Your parents no doubt remember well what they paid for their first home and may have a difficult time coming to grips with the reality of today’s pricing. Or they may encourage you to take on a large mortgage payment to “learn financial responsibility.” Ultimately, you are the only one who can really make the decision that is right for you and your family.
Explore and Engage
Don’t be afraid to engage strangers in conversation in the neighborhood where you’re contemplating a purchase. Ask residents what they like and dislike about the area and how long they’ve lived there. Most people like to be helpful and informative, and they can give you great insight. It’s better to get an insider’s perspective beforehand, rather than after you’ve made a purchase.
Buying a home—especially your first home—may seem like a daunting process. While you’re certainly not alone in your questions and fears, home ownership is an exciting process that can be incredibly rewarding. The more you know, the more comfortable you’ll feel. Why not get started now?